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Inside the Beltway

BY Ken Clark

The great H.L. Mencken wrote: "A good politician is quite as unthinkable as an honest burglar."

Is he right? I don’t know, but it seems as if Washington, D.C., is quite a mess these days, with a mounting deficit and acrimonious factions.

Still, one of the highlights on the HCN calendar is the National Lumber & Building Material Dealers Association (NLBMDA) Legislative Conference in Washington, D.C. This year’s event, in addition to several rounds of strategizing and lobbying, featured presentations from not one, but two politicians.

Speaking to the gathering of lumberyard owners, supplemented by suppliers and members of the Window and Door Manufacturers Association; Senator Angus King, an Independent of Maine; and Representative Bill Johnson, Republican of Ohio, took turns speaking.

How did it go? Ladies and gentlemen, if these two gentlemen couldn’t give a delightful speech that won over an audience, they wouldn’t have been elected in the first place.

Johnson introduced himself as a man born on a "two-wheel wagon rut mule farm." This seemed to go over well.

King introduced himself as a board member of Hancock Lumber. This went over even better.

Johnson quickly recognized the importance of the audience and his affection for employment: "Your industry is very important to many job-creating industries," he said.

King pointed out that Hancock Lumber was actually exporting product to China.

Johnson showed detailed knowledge of the hot-button EPA Lead: Renovation, Repair, and Painting Rule, calling for the reinstatement of the opt-out rule for homeowners when there are no children or pregnant women in the house. Then he kicked sand in the face of the EPA: "It’s the most out-of-control regulatory body in Washington."

King pointed out that non-defense discretional spending is at the lowest percentage of GDP in 50 years.

Johnson attacked Obamacare: "It’s going to die of its own weight," he said.

King said he didn’t vote for the Affordable Care Act, but he would have. "The idea of providing health care to millions of people who didn’t have it is a good one," he said. "It’s hard to argue with it." The room seemed to think hard about that one.

Johnson said, "Washington doesn’t get it right very often."

Regaining his footing in front of an overwhelmingly Republican audience, King finished with a tried-and-true Abraham Lincoln quote: "The dogmas of the quiet past are inadequate to the stormy present."

How can you not love these guys? Bigger question: how come things are such a mess in Washington.

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Mixed messages in home metrics

BY Gary Zauner

While housing starts and building permits continue to trend higher, builder confidence, which often dovetails nicely with housing construction figures, has dipped over the last few months.

So what gives?

According to the National Association of Home Builders (NAHB), which, in conjunction with Wells Fargo, publishes the builder confidence index, waning confidence is not necessarily due to diminishing demand for new homes.

NAHB economist David Crowe said: “In addition to tight credit and below-price appraisals, home building is beginning to suffer growth pains as the infrastructure that supports it tries to re-establish itself.” In other words, the downsizing that took place during the recession and the economic flat line that followed dramatically diminished those industries that builders rely on to support them.

One of those industries suffering “growth pains” is the wood products industry. As a result, there are certain instances where builders are not receiving their deliveries on time. However, rising demand and a cautious reaction on the part of producers to increase production creates the scenario builders and their representatives dislike even more than tardy shipments — high lumber and panel prices.

Another issue apparently lowering builders’ confidence is the draining of the skilled labor pool. The housing downturn sent framers, roofers and sheetrockers looking for other forms of work. In order to coax them back, builders sometimes now must pay higher wages, adding to their costs.

Other concerns among builders include a lack of developed lots to build upon and credit availability.

All these difficulties and roadblocks apparently slowing home production would lead one to conclude that demand for new homes is likely outpacing the number of new homes under construction. One thing learned when the housing bubble burst is that builders have a propensity to overbuild. Perhaps a slow, steady period of recuperation is best for the economy, one that keeps home building in check and lets homeowners continue to recoup some equity.

This article was provided by Crow’s Market and Price Service/RISI. For a free trial of this service, visit RISI.com/crowsfree.

Crow’s Market RecapA condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow’s Weekly Market Report.

Lumber: Trading in the SPF market slowed, but prices remained strong, even rising a few dollars in some instances. Weather again hampered sales. A sharp decline in futures early also took steam out of the market.

Buyers continued to order Southern Pine lumber volumes at a decent rate, but not as eagerly as the week prior. Mill order files and moderate demand kept upward pressure on most #2 dimension prices. Increases of $5 to $10 were typical. Coastal species lumber trading was strong and steady.

Good consumption rates brought buyers back into the market to replenish. Traders often noted the significant amount of jobs taking delivery, waiting on shipments or quoted. The market for Inland species lumber started on a quieter note than in previous weeks. Extended mill order files and limited mill offerings kept buyers on the sidelines.

Wholesalers reported steady sales of both truckload and LTL volumes out of reloads. Radiata Pine remained in short supply for Mldg&Btr, and Shop was unavailable. Limited offerings of Mldg&Btr were quickly snapped up, often at a premium.

The markets for Moulding and Shop remained a struggle for Ponderosa Pine producers. Control of the Ponderosa Pine board market remained in the hands of producers, although sales levels quieted. The slower pace was attributed to lengthy order files, as well as strong pricing.

Panels: OSB producers remained on the sidelines, relying on their order files to help them get through the slow period that has persisted. Most mill offerings were light in volume and firm or higher priced.

Southern Pine plywood mills reported a quieter tone to the market but still kept lead times of two to three weeks. Prices for thick-rated sheathing items were the most likely to rise across all three zones. While other markets enjoyed steady demand, Western Fir plywood sales remained skimpy in comparison.

Producers bemoaned the wintry weather in the northern reaches of the United States. Canadian plywood continued to struggle a bit. Producers, anticipating better demand to come in the near future, tried to hold prices, even though many of them had light order files. Both western producers and buyers of particleboard noted modest but noteworthy improvements in that market. The market for MDF remained strong. The frenzy earlier this year among buyers to secure supplies has subsided, and the market appears more orderly.

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Adventures in human resources

BY Jim Schaffer

“Why can’t I find qualified help?”

“With all of the unemployed people out there, why can’t I find the skills I’m looking for?”

These are questions we hear every day from industry employers. And with unemployment rates ranging upward from 7.5% since early 2009, they’re not illogical. So what’s the reality?

Simply stated, there have been a number of changes in the employment market since we entered the Great Recession, and hiring managers today need to be aware of them in order to compete.

As our industry entered the downturn, we began to see a “talent gap” emerge as the skill sets of those seeking employment often fell short of employers’ requirements. This was not totally unexpected, as the first baby boomers moved into early retirement as we entered the recession.

And since our industry was more negatively impacted by the economy than most, this problem was exacerbated by another reality. With layoffs and downsizing, many of our younger, upwardly mobile employees left for opportunities in more secure, growth-oriented industries.

But with the unemployment rate being so high, shouldn’t there be others just waiting to be hired? Unfortunately no, as there is yet another issue compounding the problem. Although difficult to believe, adult men have been dropping out of the workforce at an alarming rate. While more than 95% of men between the ages of 25 and 54 were active in the labor force 50 years ago, according to the BLS, less than 65% are active now.

So where have they gone? Many are on extended unemployment, many on long-term disability (more than 3 million men, according to one source), and many have just given up and become dependent on their wives’ income or content with part-time positions. In the accompanying graphs, one can see how labor force participation has remained somewhat constant for all adults over the past 20 years, but note what has happened to adult male participation.

The reality? The “labor pool” in 2013 isn’t as deep as one might think. So, as we begin to rebuild our employment base, we need to be creative and look beyond traditional recruiting scenarios, considering other options: part-time executives, contract and project employment, shared employees, virtual management, etc. And we need to consider the entire employment market, not just the “typical” candidates we considered exclusively in the past. Remember, with this smaller “labor pool,” recruiting has become a competitive process. We need to make sure we’re prepared for it.

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